Commercial Rent Arrears Recovery Plans Move Forward

A property litigation lawyer has described the Government’s announcement of more detail on the proposed Commercial Rent Arrears Recovery (CRAR) plans as an important step forward on the road to their introduction next year.

Originally mooted in the Tribunals Courts and Enforcement Act 2007, the procedures to be followed have finally been outlined in full within the Taking Control of Goods Regulations 2013 published at the end of July.

The CRAR process will replace the ancient remedy of distress, which allows a landlord to instruct a bailiff to seize goods at premises where rent is owed. The aim of CRAR is to strike a balance between landlord and tenant interests in a manner which also modernises the procedure. Primarily, the regulations include information on how enforcement agents can take control of goods.

Among the measures is guidance that landlords must give a minimum period of seven clear days’ notice in writing to a tenant before making use of CRAR, when agents are able to take control of goods, which goods will be exempt and the process for the selling and handling of such goods.

The new procedure is expected to be become law from April 2014.

Danny Revitt, a Partner and expert in property litigation issues at Irwin Mitchell, said: “This information has been eagerly awaited for some time, so the detail published will be broadly welcomed by the property industry as it finally provides a bit more clarity about what to expect from CRAR.

“While the Government has talked about the importance of striking a balance between landlords and tenants, tenants are likely to gain most from the new procedure, which attempts to ensure that any enforcement in a fair and reasonable manner.

“From a landlord’s angle, the requirement for notice is the main change, which removes the element of surprise that landlords benefit from under the current rules of distress. It remains to be seen whether a tenant which is not able to pay the rent within the notice period will simply remove from the premises any goods that a landlord could seize, leaving CRAR as a blunt weapon in a landlord’s armoury.”